China has urged its private oil refineries to maintain production levels in line with 2025 figures “at all costs,” amid the impact of the Middle East conflict, according to Bloomberg.
Citing anonymous sources, the report states that the National Development and Reform Commission held meetings with industry executives to stress that ensuring domestic fuel supply is the top priority—even if it results in financial losses.
Refineries that reduce processing rates and output could face cuts to their crude oil import quotas in the coming years, the same sources indicated.
China’s independent refiners have been particularly affected by the current environment due to their reliance on discounted crude from countries such as Iran, Russia, and Venezuela. These supplies, typically avoided by major firms, have historically helped them remain competitive during periods of low margins.
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However, recent temporary U.S. waivers on sanctions for Iranian and Russian oil—introduced to ease the global energy crisis—have effectively removed these discounts, increasing costs for the refiners.
According to data from consultancy JLC International, Chinese private refineries have recently reduced utilization rates to below 63% of capacity, the lowest level since August, while also recording their worst refining margins since 2024.
Amid the de facto blockade of the Strait of Hormuz, through which around 45% of China’s oil imports pass, the country has experienced one of the sharpest recent increases in fuel prices. This has prompted regulators to intervene in order to limit the impact on consumers.
